US shutdown: 'We're on the brink' says Senate Democrat, as Republicans calculate next move

Senate rejects Obamacare delay, leaving the House of Representatives to accept bill or find an alternative

President Barack Obama addresses the press in the Brady Briefing Room at the White House September 27, 2013 in Washington, DC. Obama spoke about recent developments with Iran, and also addressed the possible government shutdown currently being debated on Capitol Hill. (Photo by Win McNamee/Getty Images)

The morning sun illuminates the U.S. Capitol in Washington, Monday, Sept. 30, 2013, as the government teeters on the brink of a partial shutdown at midnight unless Congress can reach an agreement on funding. (AP Photo/J. Scott Applewhite)

Sen. Charles Schumer (D-NY) speaks at a press conference after the Senate voted to table House legislation to avert a government shutdown by defunding the Affordable Health Care Act as Congress remains gridlocked over legislation to continue funding the federal government September 30, 2013 in Washington, DC. (Photo by Win McNamee/Getty Images)

Traders work on the floor of the New York Stock Exchange during morning trading on September 30, 2013 in New York City. As a U.S. government shutdown looms, stocks fell sharply in the opening minutes of trading Monday with the Dow losing 150 points and the Nasdaq falling 1%. (Photo by Spencer Platt/Getty Images)

Sen. Mary Landrieu (D-LA) talks with reporters before attending a Senate Democratic caucus meeting at the U.S. Capitol September 30, 2013 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)

House Majority Leader Eric Cantor (R-VA) (C) arrives for a Republican Conference meeting at the U.S. Capitol September 30, 2013 in Washington, DC. If Boehner and the House Republicans do not find common ground with President Obama and Senate Democrats on the federal budget then at midnight large sections of the government will close. (Photo by Chip Somodevilla/Getty Images)

U.S. President Barack Obama talks to the media about a possible government shutdown during a meeting with Israeli President Benjamin Netanyahu in the Oval Office, September 30, 2013 in Washington, D.C. (Photo by Mark Wilson/Getty Images)

Sen. Barbara Boxer (D-CA speaks during a press conference to highlight measures in the House version of a government shutdown bill that would deny women affordable contraception and other health care benefits that are provided under the Affordable Care Act. According to Senate Democrats, the Republican bill specifically targets women's preventive health care. (Photo by Win McNamee/Getty Images)

Rep. Tim Griffin, R-Ar., right, joins other Republican House Members as they call on Senate Democrats to "come back to work" on the Senate Steps of the U.S. Capitol (AP Photo/Cliff Owen)

U.S. Speaker of the House Rep. John Boehner (R-OH) on his way to the House Chamber for a procedural vote on the House floor September 28, 2013 on Capitol Hill in Washington, DC. The House will vote later today on two amendments to the Senate-passed continuing resolution that will keep the government running. (Photo by Alex Wong/Getty Images)

U.S. House Minority Leader Rep. Nancy Pelosi (D-CA) speaks during her weekly news conference September 27, 2013 on Capitol Hill in Washington, DC. Pelosi discussed the latest development on a possible government shutdown. (Photo by Alex Wong/Getty Images)

30 September 2013

Republicans and democrats are locked in a political stalemate with just hours to approve a spending bill or face a partial shutdown of government services.

The Democratic-led US Senate has rejected conditions that House Republicans attached to a temporary spending bill needed to avert a federal government shutdown.

Hours before a midnight (5am UK time) deadline, the Senate voted 54-46 to strip a one-year delay in President Barack Obama's healthcare law from the bill that would keep the American government operating.

The Senate also stripped out a provision that would have eliminated a tax on medical devices.

House Republicans added the provisions early yesterday in their campaign to undo Mr Obama's signature domestic programme.

The vote came less than 10 hours before a possible shutdown and with no compromise in sight.

Democrats - and a few Republicans - are pressing for the House to approve a straightforward spending bill with no conditions.

It is now up to the House of Representatives to accept a bill that does not delay the health initiative - which it has refused to do - or find an alternative acceptable to the Senate.

If it fails to do either of those options, the US government faces its first partial shutdown in 17 years. It would force 800,000 federal workers off the job without pay and rattle the country's shaky economic recovery.

"We're at the brink," said Senator Barbara Mikulski, a Democrat, as House Republican leaders calculated their next move.

Some critical services would continue during a shutdown, such as patrolling the borders and controlling air traffic. The US State Department would continue processing foreign applications for visas, and embassies and consulates overseas would continue to provide services to American citizens.

Despite no signs of a compromise, Mr Obama insisted he is "not at all resigned to a shutdown" and he expected to speak to congressional leaders throughout the day to address the impasse.

The president has vowed not to allow Republicans to use the spending bill to derail his most important domestic policy achievement.

"There's a pretty straightforward solution to this," Mr Obama said at the White House. That is for "everybody to act responsibly and do what's right for the American people".

The prospect of a shutdown contributed to a decline in stock markets around the world. US stocks sank as Wall Street worried that the budget fight could lead to something much worse for the economy - a failure to raise the nation's borrowing limit.

Whether or not Congress averts a shutdown, Republicans are sure to move the healthcare fight to a must-do measure looming in mid-October to increase the borrowing cap. The US risks a market-rattling, first-ever default on its obligations if Congress fails to raise that limit.

Both a shutdown and a default would be politically risky ahead of next year's congressional elections.

Some Republican leaders fear the public will blame their party for a shutdown if they insist on crippling healthcare reform. But individual House members may face a greater risk by embracing a compromise. Many represent heavily partisan congressional districts, and voters in primaries have ousted politicians, particularly Republicans, they see as too moderate.

Since the last government shutdown in 1995/96, temporary funding bills have been non-controversial, with neither party willing to chance a shutdown to achieve legislative goals it could not otherwise win.

But with the three-year-old healthcare law nearing implementation, hardcore tea party conservatives are determined to block it.

There are few issues Republicans feel as passionately about as the healthcare reform, which they have dubbed "Obamacare". They see the plan, intended to provide coverage for the millions of Americans now uninsured, as wasteful and restricting freedom by requiring most Americans to have insurance.

A crucial part of the plan will begin tomorrow, whether or not the government partially closes: enrolment in new healthcare exchanges for millions of Americans. That is because most of the programme is paid from money not subject to congressional appropriations.

House Republican leaders met in Speaker John Boehner's office to plan their next move. Officials said that even though time was running short, they expected at least one more attempt to squeeze a concession from the White House, probably a demand to force a one-year delay in the requirement for individuals to purchase health coverage or face financial penalties.

Republican unity over their strategy showed unmistakable signs of fraying as the deadline neared. Several Republican senators and House members said they would be willing to vote for straightforward legislation that would keep the government functioning, with no healthcare-related provisions.

"We haven't given up on Obamacare ... but for this week we may have to give up," said Republican Representative Doug Lamborn.

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